I've been paying more attention to stories on prescription drugs recently, for all kinds of reasons. My mom will be 90 this year, and in recent years her prescription drug insurance limits for the calendar year are exceeded by about St. Patrick's Day, so we've been exploring ways to manage those costs better.
And the anti-inflammatories I've been taking for years so I can play sports and pretend I'm not 52 are now putting me at risk of heart attack or stroke, if new studies are to be believed. On top of that, we're warned that if you think Social Security is going to bankrupt us, just wait till you see the government tab for the new prescription drug entitlement.
A new article by Dick Meyer of CBS News says we're often too quick to put the black hat on the pharmaceutical companies. A large part of the problem is our own expectations, of drugs and of government.
The population of Western nations at the start of the 21st century is by far the healthiest population in human history. We take that for granted. We routinely expect what in truth are medical miracles. And we expect these miracles to come for free - and risk-free. Reality, of course, doesn't work that way. And so we affix blame: on insurance companies, on HMOs, on doctors, but mostly, these days, on drug companies.We expect drug companies to be altruistic, not to be motivated by profits, unless, of course, we have pharmaceuticals in our union pension plan or 401(k). We expect them to invent in just a few years medicines that will be used for decades without side effects. We expect perfect regulation of these companies. And we expect that if anything ever goes wrong, we should be able to sue the pants off the drug companies and get compensated.
Meyer links to an October 2004 New Yorker article by Malcolm Gladwell that I had missed when it came out, but I found it full of good insights and information. Here's an excerpt on the ways that prevalence and volume of drug use impact on the overall increase in the cost of drugs as much as, or more than price:
In 2003, the amount that Americans spent on cholesterol-lowering drugs rose 23.8 per cent, and similar increases are forecast for the next few years. Why the increase? Well, the baby boomers are aging, and so are at greater risk for heart attacks. The incidence of obesity is increasing. In 2002, the National Institutes of Health lowered the thresholds for when people with high cholesterol ought to start taking drugs like Lipitor and Mevacor. In combination, those factors are having an enormous impact on both the prevalence and the intensity of cholesterol treatment. All told, prescription-drug spending in the United States rose 9.1 per cent last year. Only three of those percentage points were due to price increases, however, which means that inflation was about the same in the drug sector as it was in the over-all economy. Angell’s book and almost every other account of the prescription-drug crisis take it for granted that cost increases are evidence of how we’ve been cheated by the industry. In fact, drug expenditures are rising rapidly in the United States not so much because we’re being charged more for prescription drugs but because more people are taking more medications in more expensive combinations. It’s not price that matters; it’s volume.This is a critical fact, and it ought to fundamentally change the way we think about the problem of drug costs. Last year, hospital expenditures rose by the same amount as drug expenditures—nine per cent. Yet almost all of that (eight percentage points) was due to inflation. That’s something to be upset about: when it comes to hospital services, we’re spending more and getting less. When it comes to drugs, though, we’re spending more and we’re getting more, and that makes the question of how we ought to respond to rising drug costs a little more ambiguous.
This whole piece is excellent (it made David Brooks' list of best essays of the year) so take a look.
Posted by dan at February 19, 2005 10:12 PM